Findings from research into partner ecosystem development: “Communications Service Provider segment advanced in thinking, lagging in execution.”

Amsterdam, May 16, 2018 – BearingPoint today unveils the findings from a comprehensive study into partner ecosystems in the telco industry. Partner ecosystems: the silver bullet for telco woes? reveals that Communications Service Providers (CSPs) have high expectations of the value partner ecosystems will deliver to their businesses – 50% anticipate a 16%+ revenue bump in just two years. However, CSPs are yet to embark on the execution of ecosystem strategies, frustrated primarily by a series of technological challenges. In short, while CSPs realize the strategic importance of partner ecosystems to their future, they are failing to overcome internal barriers preventing successful execution.

Partner ecosystems: an unrealistic cure-all?

CSPs are under pressure to innovate in order to counter commoditization, win customers and grow topline revenue. Few innovations (improvements or new services) are created solely in-house and so the right partner ecosystem is paramount. All the more with digital, where services can be seamlessly added and combined at speed. Co-innovation and co-funding of more sophisticated and harder to replicate offers to which CSPs add their own service wrapper and experience, is the only practicable model. CSP expectations on the contribution from ecosystem partners are running extremely high.

Six out of ten CSPs expect partner ecosystems to drive cost effective innovation. 59% to help them remain competitive. Just over half (51%) expect ecosystems to improve customer experience. CSPs also expect them to create direct customer relationships, enhance their own internal ecosystems and improve efficiency. However, the most telling finding is that half of CSPs expect their revenues to grow by more than 16% over the next two years on the back of successfully building partner ecosystems. Even more extreme, 12% of CSPs anticipate revenue growth of more than 25%.

Revenue, innovation, competitive positioning, customer experience and more. CSP expectations of the step change in business performance from adding partner ecosystems are very high. Our research also shows that companies adopting digital platform-based business models grow at twice the rate of those that don’t, simply because this allows them to generate value from their partner ecosystems. Considering that fact, perhaps partner ecosystems are the closest thing to a ‘silver bullet’ we’ve seen in telco in years.

Angus Ward, CEO Digital Platform Solutions at BearingPoint

Progress report: telco lags on ecosystem execution

Despite their importance, CSPs are significantly behind in implementing the new business models and digital offerings based on partner ecosystems seen as vital to future success. Only 26% of CSPs have embarked on execution versus an average of 34% across industries surveyed. 27% of CSPs are about to embark on execution, 31% are analyzing their options and 14% are at the very start of their journey. 2% have not even considered business model innovation and the development of new digital offerings.

That a third of CSPs appear ‘stuck’ in the analysis phase is concerning. It reflects how much CSPs rely still are on rapidly commoditizing products rather than proactively moving to differentiate to win new customers and protect revenues and profits. It’s important they begin to develop their ecosystem by putting the right strategy in place. Crucially, this should complement business objectives, identify appropriate partners and go-to-market offerings, and move to execution quickly, if the benefits they expect are to be realized.

Henri Tcheng, Global Leader Consumer Industries at BearingPoint

Ecosystem inhibitors: tech challenges loom large

Three of the top four challenges facing CSPs in curating ecosystems are technological in nature, asking deeper questions on CSPs’ capacity to deliver the right technology, skills and business agility:

Having the right technology in place to manage monetization across the partner ecosystem (55%)

Overcoming a complex IT environment that cannot support a minimum viable product or fail fast concept (51%)

Ability to manage ecosystem partner relationships (49%)

Having the right technology and digital business platform to manage the partner ecosystem (48%)

While business benefits drive the appeal of digital platform-based business models, technology challenges are frustrating CSP attempts to execute – be it making sure that partners get paid, creating agile environments for experimentation or simply providing a platform to bring together partners to create new services and exchange data and ideas.

Henri Tcheng, Global Leader Consumer Industries at BearingPoint

Ecosystem expectations are high, but execution is only commencing. Without a shift to new underlying digital business platform technologies that are designed to facilitate partner ecosystem-based innovation and more sophisticated offers, CSP efforts to introduce new business models will surely fail. It’s time to stop talking about the potential of the ecosystem and start realizing the benefits.

Methodology:

The primary research was commissioned by BearingPoint // Beyond and conducted by Coleman Parkes in March and April 2018. The telco sample comprised 85 executives representing tier one and tier two CSPs across Europe, Asia and the U.S. In addition, 440 executives across IT, technology, automotive, transport, banking and insurance sectors were also surveyed, to help rank the progress of CSPs against other industries driving significant digital change.

About BearingPoint

BearingPoint is an independent management and technology consultancy with European roots and a global reach. The company operates in three units: Consulting, Solutions and Ventures. Consulting covers the advisory business; Solutions provides the tools for successful digital transformation, regulatory technology and advanced analytics; Ventures drives the financing and development of start-ups. BearingPoint’s clients include many of the world’s leading companies and organizations. The firm has a global consulting network with more than 10,000 people and supports clients in over 75 countries, engaging with them to achieve measurable and sustainable success.